American magazines

Bono's capitalist tool

Forbes and an Irish rocker get together

“I DO not intend to fire myself,” says Steve Forbes, chief executive of his family's media group, editor of its flagship business magazine and sometime presidential candidate. He dismisses talk that this week's sale of a 40% stake in the group to a private-equity firm which numbers Bono, a rock star, among its founders, is the latest stage in his family's liquidation of its assets in the face of financial difficulties. Recently the Forbes clan has sold its Fabergé eggs, the best of its Victorian art, some property and a private jet. On the contrary, insists Mr Forbes, the deal is to fund an ambitious growth strategy for the family firm.

APIn the name of internal rate of return

Mr Forbes wants an injection of cash to develop Forbes Media's online operations. Elevation Partners is paying between $250m and $300m for its stake. Roger McNamee, another of Elevation's founders, seems to share his optimism. Mr McNamee says that the gloom in the print industry—at newspapers even more than magazines—is enormously overdone. Forbes, he says, has an authoritative voice and is trusted by its readers, not least because of its consistent enthusiasm for business ever since the “capitalist tool”, as it calls itself, was founded in 1917.

Elevation believes that the big opportunity may lie in the second phase of the commercial development of the internet. The first phase was all about aggregation, Mr McNamee says: the enthusiastic, indiscriminate pulling together of all sorts of things. This was a “difficult place” for print. Having an authoritative voice was undervalued then, but will be hugely valuable in “Web 2.0”, which will provide new ways to make money from well-written, accurate analysis of the business world.

But the purchase is certainly a gamble. Some people question the quality, in commercial terms, of the readers who are attracted to the Forbes website, which covers a wider range of subjects than the magazine. The website brings in money, but a robustly profitable business model is still work in progress. There are suggestions that Elevation may have overpaid. Private-equity firms are flush with cash and some may be desperate to spend it. Many others, such as Providence Equity Partners, have either invested in media businesses already or are planning to.

Condé Nast, publisher of dozens of magazines, including the New Yorker and Vogue, reportedly bid for Forbes a while ago, but was put off by the price. Instead, it is to launch Portfolio, a business magazine of its own, next April. Insiders say that news of Condé Nast's new title persuaded Mr Forbes and Elevation to conclude their long courtship.

As for Bono, investing in a publication that celebrates capitalism and consumption may seem to sit awkwardly with his crusades against world poverty, including a trip to Africa with Paul O'Neill, America's treasury secretary at the time. Although he has not spoken publicly about Elevation's investment, he presumably agrees with Mr Forbes, who believes that entrepreneurship is the best way to tackle poverty (the archetypical hero of a Forbes story is someone who pulls himself up from nothing). His fellow members of U2, Bono once said, would rather he hung out with businessmen than with politicians.